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Leather-footwear firms may benefit little from TPP
Tran Thu
Tuesday,  Jul 16, 2013,21:38 (GMT+7)

Leather-footwear firms may benefit little from TPP

Tran Thu

By Tran Thu - The Saigon Times Daily

Foreign visitors inspect Vietnamese footwear at the international leather and footwear exhibition in HCMC last Thursday. The U.S. and the EU now are the two biggest importers of the local leather-footwear industry - Photo: Thu Nguyet

HCMC – It is probable that local leather-footwear companies won’t benefit much from the Trans-Pacific Strategic Economic Partnership Agreement (TPP) under negotiations now, said Diep Thanh Kiet, vice chair of the Vietnam Leather and Footwear Association (Lefaso).

At a seminar on the sidelines of this year’s international leather and footwear exhibition in HCMC last Thursday, Kiet said the TPP brings benefits to the country’s leather-footwear industry as a whole. However, he noted, when import tariffs are slashed in line with the TPP, it is foreign importers who will enjoy the most benefits besides consumers.

Currently, about half of leather-footwear exports of local companies are done under subcontracts, meaning the enterprises only enjoy 10-15% of the product value. For the remaining half of footwear exports, local subcontractors earn 25-30% of the total value.

As such, the biggest value proportion still belongs to big foreign brands and distributors, according to Kiet.

Meanwhile, foreign-invested companies though accounting for less than one quarter of the total number of members in the industry are earning up to 77% of the country’s total leather-footwear exports. Once the TPP becomes valid, foreign-invested companies will stand to earn the most, Kiet said.

At present, the two global giant shoes brands Nike and Adidas are having 30% of their outputs processed in Vietnam. However, sub-contractors for these two giants are mostly South Korean and Taiwanese firms, not Vietnamese ones.

Textile-garment, leather-footwear and seafood products are believed to have many opportunities for exports when the TPP gets effective, said Vuong Duc Anh from the Import-Export Department under the Ministry of Industry and Trade.

The present export tariffs imposed on local footwear shipments to the U.S. are high, ranging from 37.5% to 48%. Still, it is likely that local footwear won’t be subject to a low export tariff of 0% as soon as the agreement comes into force as footwear products might fall into the exclusive category under the TPP, Anh added.

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